RBI may keep repo rate unchanged for 4th time

The Reserve Bank of India (RBI) is likely to maintain its monetary policy rates and stance for the fourth time in a row this week, economists polled by Mint said, amid elevated retail inflation and a hawkish US Federal Reserve

- Gopika Gopakumar

Most economists expect the repo rate to stay unchanged at 6.5% and the policy stance at the withdrawal of accommodation. Even as core inflation has continued to cool, retail inflation remains above RBI’s target band, and the central bank may keep a close watch on uneven monsoon rains and rising crude oil prices.

“We expect the MPC (monetary policy committee) to remain on hold in the October policy while continuing to demonstrate caution amid a cloudy outlook for food inflation and elevated crude oil prices. In Icra’s view, inflation would need to persist above 6% for at least two quarters, amid transmission of pressures to core inflation, to set the stage for a rate hike," said Aditi Nayar, chief economist at Icra.